TONY BURKE, MANAGER OF OPPOSITION BUSINESS AND SHADOW FINANCE MINISTER: Good to be back.

SALES: Regarding Labor's negative gearing policy: what impact will it have on housing prices? Will it cause them to fall?

BURKE: No. This has been modelled to death. You've had the McKell report. You've had reports from the ANU, Saul Eslake and Richard Holden. The fact that Labor's policy completely guarantees that whatever housing people currently have negatively geared doesn't change, that decision means that you soften the impact and you don't have house prices fall. What you do have, though, is an increase in supply and improvement to the budget bottom line and the funding needed to be able to provide additional investment in health and education.

SALES: But the Prime Minister points out that about a third of the people in the property market are invested. So therefore, isn't it basic economics to infer some of those people may choose not to invest in property if negative gearing's not so favourable; and so therefore there's less demand for property and therefore prices fall?

BURKE: There are many countries around the world that don't have negative gearing. They still have housing prices that go up over time.

SALES: Last March Labor put out a statement on housing affordability and said it was an increasing concern and Labor was holding a housing affordability round table and it released a discussion paper. Whatever happened to that?

BURKE: Well, in terms of where we're at: we've said that we'll have more to say on housing affordability. But certainly the biggest issue in housing affordability remains supply. This is one of the problems with negative gearing at the moment. The Property Council, and Malcolm Turnbull, will argue the current policy settings help supply. Well, only seven per cent of negatively geared properties have been in new housing, which is where the supply and the jobs are created from. So, to be able to have future investment from the first of July next year, so whatever people already have stays, but from the first of July next year new negative gearing would be in new property. That means that you've got that additional investment helping with supply.

SALES: Labor's announced a number of major economic policies: take, for example, negative gearing we're talking about; multinational tax; high-income super; the tobacco excise. Those policies are about increasing your tax take. Let me take you back to a first principles question. Can voters assume the philosophy underpinning Labor's economic philosophy approach is "tax and spend"? That you will rely on tax in order to raise money to fund your spending commitments?

BURKE: Well, a couple of things on this, if I may. First of all, we've also announced a series of policies, and there will be more to come, on where we would make spending cuts. We certainly would get rid of the Emissions Reduction Fund, which pays polluters to pollute. We wouldn’t go ahead with the plebiscite Government members intend to ignore anyway. And we wouldn’t re-introduce the baby bonus.

SALES: But what I'm asking you about is your first principles. I'm asking about your first principles in economic policy?

BURKE: Yeah. And in first principles in economic policy, I don't think, while they are accounted for as changes in tax: look at it this way, with respect to the superannuation example you put there with high-income superannuation tax concessions. If you're going to provide additional funds as a government to retirees, if you provide additional funds to a pensioner, that gets accounted as a spending proposal. If you provide additional funds to someone who is very wealthy, on very high-end income super, it gets accounted for as a tax concession. Either way, the impact on the budget bottom line is exactly the same.

SALES: But I guess what I'm asking is: in 2016, is a Labor government going to be a government that you're underpinning philosophy is that it's okay to have higher taxes to support government spending? Because that's traditionally what Labor has been about compared to, say, a Coalition government?

BURKE: Our underpinning philosophy is you can't support loopholes that no longer have an economic purpose. And that's for each of the measures you've gone through there. They are loopholes that currently exist that are not delivering in terms of growth. We want, for example, with high-income super, to be able to pare those concessions back; with respect to negative gearing, to be able to target it at the productive end of the economy.

SALES: When Labor's asked how it intends to fund spending commitments such as, say, education, it points to tax policies it's announced so far and says that, you know, that will cover it. If your reforms so far are to cover future spending, then how do you ever intend to pay down the budget deficit?

BURKE: Well, at the moment we've announced more than $100 billion worth of improvements to the budget bottom line. Our spending commitments go nowhere near that. We're also in a situation where we have more to say in terms of where we would get rid of government waste. We've got more to say in terms of other areas of policy, like health, as well.

SALES: Do you, again, just another first principles question, do you accept that, in order to get on top of the budget deficit and structural budget problems, there do need to be cuts in spending?

BURKE: We have a spending problem and a revenue problem. You need logically to be able to deal with both. The last time the budget was in broad balance was back in 2002, when both were running around the 25 per cent mark. What we've had is spending has moved a bit up and revenue has moved a long way down from that. So the revenue problem is worse than the spending problem, but you need to acknowledge both and deal with both.

SALES: On another matter: Labor's going to vote against the Government's Senate reform legislation. Don't you think you might regret that next time you're in government and you're trying to get legislation through a Senate that's full of micro-party senators?

BURKE: At the moment this proposal takes the votes of more than three million people, and we've got to face it as a major party, more than three million Australians exercise a vote for a party that is not one of the major parties; that don't vote for the Coalition, for Labor or for the Green political party for that matter. Now, this proposal effectively throws those three million votes in the bin -

SALES: No, it doesn't.

BURKE: Through exhausting their votes. If they're exhausted and they're not counted and they don't end up going towards the election of anyone, I don't know how we can say that they count towards any member of Parliament receiving them.

SALES: Well, I assume they can choose to have optional preferences if they wish?

BURKE: And if you're saying they then have to vote to have their preferences go through every single number until they haven’t exhausted, that that's the only way to keep their vote alive, the practical implication of that will be that a whole lot of these votes never end up being counted towards a candidate at all.

SALES: But why should parties that get a miniscule primary vote be able to secure Senate seats by extensive preference deals?

BURKE: Look, I want, whenever people vote, for everybody to vote for my party. It's not going to happen. I have to accept the fact, and every party has to accept the fact, people will vote in different ways. When three million people are voting for minor parties, a change that effectively means you end up giving them no representation can hardly be seen as a democratic reform.